Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Routing Fees to C2, 14141-14144 [2013-04857]
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Federal Register / Vol. 78, No. 42 / Monday, March 4, 2013 / Notices
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(LOCA) methodology that requires
revising TS 5.6.5.b to include a
reference to the modified LOCA
methodology. Also, the amendments
revise TSs 3.3.1.1, 5.6.5.a, and 5.6.5.b to
include the modified LOCA
methodology and the oscilliation power
range monitor upscale function period
based detection algorithm setpoint
limits.
Date of issuance: February 15, 2013.
Effective date: The amendments are
effective as of this date of issuance. For
Unit 2, the amendment shall be
implemented prior to entering Mode 3
(i.e., Hot Shutdown) from the spring
2013 refueling outage. For Unit 3,
changes to TSs 5.6.5 and 3.3.1 shall be
implemented within 60 days of
issuance. The remaining changes shall
be implemented prior to entering Mode
3 from the spring 2014 refueling outage.
Amendment Nos.: Unit 1—309 and
Unit 2—268.
Renewed Facility Operating License
Nos. DPR–52 and DPR–68: Amendments
revised the licenses and TSs.
Date of initial notice in Federal
Register: The original application
dated February 25, 2011, was noticed on
May 3, 2011 (76 FR 24930). The
supplement dated July 30, 2012, was
noticed on November 5, 2012 (77 FR
66490). The supplement dated January
24, 2013, provided additional
information that clarified the licensee’s
July 30, 2012, submittal, did not expand
the scope of the application as noticed
and did not change the NRC staff’s
proposed no significant hazards
consideration determination as
published in the FR on November 5,
2012 (77 FR 66490).
The Commission’s related evaluation
of the amendment is contained in a
Safety Evaluation dated February 15,
2013.
No significant hazards consideration
comments received: No.
Virginia Electric and Power Company,
Docket No. 50–339, North Anna Power
Station, Unit No. 2, Louisa County,
Virginia
Date of application for amendment:
May 11, 2012.
Brief Description of amendment: The
amendment would revise the Technical
Specification (TS) 3.1.7, ‘‘Rod Position
Indication’’ to allow two demand
position indicators in one or more banks
to be inoperable for up to 4 hours. This
change is proposed as a temporary
change to the TS for the current
operating cycle and is proposed as a
footnote to the current TS Limiting
Condition for Operation (LCO) Section
3.1.7, Condition D.
Date of issuance: February 14, 2013.
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Effective date: As of the date of
issuance and shall be implemented
within the end of operating Cycle 22.
Amendment No.: 251.
Renewed Facility Operating License
No. NPF–7: Amendment changes the
license and the TS.
Date of initial notice in Federal
Register: June 12, 2012 (77 FR 35077).
The Commission’s related evaluation
of the amendment is contained in a
Safety Evaluation dated February 14,
2013.
No significant hazards consideration
comments received: No.
FOR FURTHER INFORMATION CONTACT:
Dated at Rockville, Maryland, this 25th day
of February 2013.
For the Nuclear Regulatory Commission.
Louise Lund,
Deputy Director, Division of Operating
Reactor Licensing, Office of Nuclear Reactor
Regulation.
Sunshine Act Meetings
[FR Doc. 2013–04885 Filed 3–1–13; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68992]
Public Availability of the Securities and
Exchange Commission’s FY 2012
Service Contract Inventory
U.S. Securities and Exchange
Commission.
ACTION: Notice.
AGENCY:
In accordance with Section
743 of Division C of the Consolidated
Appropriations Act of 2010 (Pub. L.
111–117), SEC is publishing this notice
to advise the public of the availability
of the FY2012 Service Contract
Inventory (SCI) and the FY2011 SCI
Analysis. The SCI provides information
on FY2012 actions over $25,000 for
service contracts. The inventory
organizes the information by function to
show how SEC distributes contracted
resources throughout the agency. SEC
developed the inventory per the
guidance issued on November 5, 2011
by the Office of Management and
Budget’s Office of Federal Procurement
Policy (OFPP). OFPP’s guidance is
available at https://www.whitehouse.gov/
sites/default/files/omb/procurement/
memo/service-contract-inventoriesguidance-11052010.pdf. The Service
Contract Inventory Analysis for FY2011
provides information based on the
FY2011 Inventory. The SEC has posted
its inventory, a summary of the
inventory and the FY2011 analysis on
the SEC’s homepage at https://
www.sec.gov/about/secreports.shtml or
https://www.sec.gov/open.
SUMMARY:
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Direct questions regarding the service
contract inventory to Vance Cathell,
Director, Office of Acquistions,
202.551.8385 or CathellV@sec.gov.
Dated: February 27, 2013.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013–04917 Filed 3–1–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold an Open Meeting
on Wednesday, March 6, 2013 at 10:00
a.m., in the Auditorium, Room L–002.
The subject matter of the Open
Meeting will be:
The Commission will consider
whether to propose Regulation Systems
Compliance and Integrity (Regulation
SCI) under the Securities Exchange Act
of 1934 (‘‘Exchange Act’’) and
conforming amendments to Regulation
ATS under the Exchange Act.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: February 27, 2013.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013–04987 Filed 2–28–13; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68977; File No. SR–BX–
2013–017]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change Relating to
Routing Fees to C2
February 25, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
1 15
2 17
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CFR 240.19b–4.
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Federal Register / Vol. 78, No. 42 / Monday, March 4, 2013 / Notices
21, 2013, NASDAQ OMX BX, Inc. (‘‘BX’’
or ‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend fees
for routing options to away markets in
Chapter XV, entitled ‘‘Options Pricing,’’
at Section 2.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxbx.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to amend its
Routing Fees at Chapter XV, Section
2(4) of the Exchange Rules in order to
recoup costs applicable to the C2
Options Exchange, Inc. (‘‘C2’’) that the
Exchange incurs for routing and
executing orders in equity options.
Today, the Exchange calculates Routing
Fees by assessing certain Exchange costs
related to routing orders to away
markets plus the away market’s
transaction fee. The Exchange assesses a
$0.05 per contract fixed Routing Fee
when routing orders to the NASDAQ
OMX PHLX LLC (‘‘PHLX’’) and the
NASDAQ Stock Market LLC (‘‘NOM’’)
and a $0.11 per contract fixed Routing
Fee to all other options exchanges in
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addition to the actual transaction fee or
rebate paid by the away market.3
The fixed Routing Fee is based on
costs that are incurred by the Exchange
when routing to an away market in
addition to the away market’s
transaction fee. For example, the
Exchange incurs a fee when it utilizes
Nasdaq Options Services LLC (‘‘NOS’’),
a member of the Exchange and the
Exchange’s exclusive order router.4
Each time NOS routes to away markets
NOS incurs a clearing-related cost 5 and,
in the case of certain exchanges, a
transaction fee is also charged in certain
symbols, which fees are passed through
to the Exchange. The Exchange also
incurs administrative and technical
costs associated with operating NOS,
membership fees at away markets,
Options Regulatory Fees (‘‘ORFs’’) and
technical costs associated with routing
options.
C2 recently filed a ruled change to
amend its transaction fees and rebates
for simple,6 non-complex orders, in
equity options classes which became
operative on February 1, 2013.7 C2
assesses its transaction fees based on a
formula wherein fees are calculated on
a per-contract basis.8 C2 pays rebates
based on a formula wherein rebates are
calculated on a per-contract basis.9
3 Today, the transaction fee assessed by the
Exchange is based on the away market’s actual
transaction fee or rebate for a particular market
participant at the time that the order was entered
into the Exchange’s trading system. This transaction
fee is calculated on an order-by-order basis, since
different away markets charge different amounts. In
the event that there is no transaction fee or rebate
assessed by the away market, the only fee assessed
is the fixed Routing Fee. With respect to the rebate,
the Exchange pays a market participant the rebate
offered by an away market where there is such a
rebate. Any rebate available is netted against a fee
assessed by the Exchange. The Exchange is not
proposing to amend its calculation of the away
market’s transaction fee as described herein.
4 See BX Rules at Chapter VI, Section 11(e) (Order
Routing).
5 The Options Clearing Corporation (‘‘OCC’’)
assesses a clearing fee of $0.01 per contract side.
See Securities Exchange Act Release No. 68025
(October 10, 2012), 77 FR 63398 (October 16, 2012)
(SR–OCC–2012–18).
6 C2 defines simple orders to exclude ETFs and
indexes.
7 See Securities Exchange Act Release No. 68792
(January 31, 2013), 78 FR 8621 (February 6, 2013)
(SR–C2–2013–004).
8 C2 utilizes the following formula to calculate its
transaction fees: C2 BBO Market Width at time of
execution) × (Market Participant Rate) × 50. The C2
BBO Market Width is the difference between the
quoted best offer and best bid in each class on C2
(the displayed C2 ask price minus the displayed C2
bid price). The Market Participant Rates are
different rates for different types of market
participants, as follows: Market Participant Rate; C2
Market-Maker 30%; Public Customer (Maker) 40%;
all other origins 50%. See C2’s Fees Schedule.
9 C2 utilizes the following formula to compute
rebates for simple, non-complex Public Customer
orders in all equity options classes that remove
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Because of this recent rule change, the
Exchange proposes to amend C2
Routing Fees to provide transparency to
its market participants.
The Exchange proposes to amend its
non-Customer C2 Routing Fees to assess
the fixed cost of $0.11 per contract plus
a flat rate of $0.85 per contract, except
with respect to Customers.10 With
respect to Customers, the Exchange
proposes not to pass the rebate offered
by C2, as is the case today for Routing
to C2 and other away markets. The
Exchange proposes to not assess
Customers a Routing Fee when routing
orders to C2. This is similar to the
manner in which the BATS Exchange,
Inc. (‘‘BATS’’) prices Customer orders
routed to C2.11 The Exchange proposes
to specifically note the amended rates in
its rule text in order to simplify C2
Routing Fees.
As with all fees, the Exchange may
adjust these Routing Fees in response to
competitive conditions by filing a new
proposed rule change.
2. Statutory Basis
BX believes that its proposal to amend
its pricing is consistent with Section
6(b) of the Act12 in general, and furthers
the objectives of Section 6(b)(4) of the
Act,13 in particular, in that it is an
equitable allocation of reasonable fees
and other charges among its
Participants.
The Exchange believes that its
proposal to amend non-Customer C2
Routing Fees from actual transaction
charges to a flat rate, in addition to its
fixed cost, is reasonable because the
current C2 Routing Fees are not
transparent. The Exchange believes that
assessing a flat rate in addition to the
fixed cost assessed by the Exchange will
provide market participants certainty
with respect to C2 Routing Fees.
Further, each destination market’s
transaction charge varies and there is a
cost incurred by the Exchange when
routing orders to away markets. The
costs to the Exchange include clearing
costs, administrative and technical costs
associated with operating NOS,
membership fees at away markets, ORFs
liquidity (i.e. takers): Rebate = (C2 BBO Market
Width at time of execution) × (Order Size
Multiplier) × 50. The order size multiplier is as
follows: 1–10 contracts will be 36%; 11–99
contracts will be 30%; 100–250 contracts will be
20% and 251 plus contracts is 0%. The maximum
rebate is capped at $0.75 per contract. See C2’s Fees
Schedule.
10 Recent pricing changes by C2 will result in a
maximum fee of $0.85 per contract for nonCustomer orders executed at C2 and rebates or free
executions for Customer orders executed at C2.
11 See SR–BATS–2013–012 (not yet published).
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(4).
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and technical costs associated with
routing options. The Exchange believes
that the proposed non-Customer C2
Routing Fees will enable the Exchange
to recover the costs it incurs to route
orders to C2 in addition to the flat fee
to recoup transaction costs.
The Exchange believes that its
proposal to amend the non-Customer C2
Routing Fees from actual transaction
charges to a flat rate, in addition to its
fixed cost, is equitable and not unfairly
discriminatory because the Exchange
would uniformly assess the same C2
Routing Fees to all non-Customer
market participants. Under its flat fee
structure, taking all costs to the
Exchange into account, the Exchange
may operate at a slight gain or a slight
loss for orders routed to and executed at
C2. The Exchange believes that its
proposed Routing Fees for routing nonCustomer orders to C2 are reasonable
because they are an approximation of
the maximum fees the Exchange will be
charged for such executions, including
costs. As a general matter, the Exchange
believes that the proposed fees will
allow it to recoup and cover its costs of
providing routing services to C2.
The Exchange believes that its
proposal to not pay a rebate to
Customers and assess no Customer
Routing Fee is reasonable, equitable and
not unfairly discriminatory. The
Exchange believes that the pricing
structure is reasonable because,
although not an approximation of the
cost of routing to C2, Customer orders
will still receive executions free of
charge, whereas all other non-Customer
routed orders routed to C2 would be
assessed a Routing Fee. The Exchange
believes that the proposed pricing for
Customer orders is equitable and not
unfairly discriminatory because it
would apply uniformly to all Customer
transactions. Participants desiring the
rebate offered by C2 can route orders
directly in order to take advantage of the
rebate. Market participants may submit
orders to the Exchange as ineligible for
routing or ‘‘DNR’’ to avoid Routing Fees.
Further, the Exchange believes that it
is equitable and not unfairly
discriminatory to assess a fixed cost of
$0.05 per contract to route orders to
NASDAQ OMX away markets (BX
Options and NOM) because the cost, in
terms of actual cash outlays, to the
Exchange to route to those markets is
lower. For example, costs related to
routing to BX Options and NOM are
lower as compared to other away
markets because NOS is utilized by all
three exchanges to route orders.14 NOS
14 See Chapter VI, Section 11 of the NASDAQ and
BX Options Rules and Phlx Rule 1080(m)(iii)(A).
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and the three NASDAQ OMX options
markets have a common data center and
staff that are responsible for the day-today operations of NOS. Because the
three exchanges are in a common data
center, Routing Fees are reduced
because costly expenses related to, for
example, telecommunication lines to
obtain connectivity are avoided when
routing orders in this instance. The
costs related to connectivity to route
orders to other NASDAQ OMX
exchanges are de minimis. When
routing orders to non-NASDAQ OMX
exchanges, the Exchange incurs costly
connectivity charges related to
telecommunication lines and other
related costs when routing orders. The
Exchange believes it is reasonable,
equitable and not unfairly
discriminatory to pass along savings
realized by leveraging NASDAQ OMX’s
infrastructure and scale to market
participants when those orders are
routed to BX Options and NOM. It is
important to note with respect to
routing to an away market that orders
are routed based on price first.15 The
Exchange will route orders to away
markets where the Exchange’s
disseminated bid or offer is inferior to
the national best bid (best offer)
(‘‘NBBO’’) price.16
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the rule change
would allow the Exchange to recoup its
costs when routing orders designated as
available for routing by the market
participant to C2. Participants may
choose to mark the order as ineligible
for routing to avoid incurring these
fees.17 Today, other options exchanges
also assess similar fees to recoup costs
incurred by the Exchange to route
orders to away markets. The Exchange
routes orders to away markets where the
Exchange’s disseminated bid or offer is
inferior to the national best bid (best
offer) (‘‘NBBO’’) price and based on
price first.18
The Exchange operates in a highly
competitive market, comprised of
eleven exchanges, in which market
participants can easily and readily
direct order flow to competing venues if
they deem fee levels at a particular
15 See BX Rules at Chapter XII (Options Order
Protection and Locked and Crossed Market Rules).
16 See BX Rules at Chapter VI, Section 11(e)
(Order Routing).
17 Id.
18 See supra note 15.
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14143
venue to be excessive. Accordingly, the
fees that are assessed by the Exchange
must remain competitive with fees
charged by other venues and therefore
must continue to be reasonable and
equitably allocated to those Participants
that opt to direct orders to the Exchange
rather than competing venues.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.19 At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number No. SR–BX–2013–017 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number No. SR–BX–2013–017. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
19 15
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post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of BX. All comments received will
be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number No. No. SR–
BX–2013–017, and should be submitted
on or before March 25, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–04857 Filed 3–1–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68987; File No. SR–MSRB–
2013–02]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Notice of Filing of a Proposed
Rule Change Relating to Amendments
to MSRB Rule G–39, on Telemarketing
sroberts on DSK5SPTVN1PROD with NOTICES
February 26, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
11, 2013, the Municipal Securities
Rulemaking Board (‘‘MSRB’’) filed with
the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been substantially prepared by the
MSRB. The Commission is publishing
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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this notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The MSRB is filing with the
Commission proposed amendments to
MSRB Rule G–39, on telemarketing. The
proposed rule change would adopt
provisions that are substantially similar
to the telemarketing rules of the Federal
Trade Commission (‘‘FTC’’).
The text of the proposed rule change
is available on the MSRB’s Web site at
www.msrb.org/Rules-andInterpretations/SEC-Filings/2013Filings.aspx, at the MSRB’s principal
office, and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
MSRB included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. The MSRB has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Summary of Proposed Rule Change.
The MSRB proposes to amend Rule G–
39, on telemarketing, to add provisions
that are substantially similar to FTC
rules that prohibit deceptive and other
abusive telemarketing acts or practices.3
Rule G–39 currently requires brokers,
dealers, and municipal securities
dealers (‘‘dealers’’) to, among other
things, maintain do-not-call lists and
limit the hours of telephone
solicitations. In 1996, the SEC directed
the MSRB to enact a telemarketing rule
in accordance with the Prevention Act.4
The Prevention Act requires the
3 The FTC initially adopted its rules prohibiting
deceptive and other abusive telemarketing acts or
practices (the ‘‘Telemarketing Sales Rule,’’ codified
at 16 CFR 310.1–9) in 1995 under the Telemarketing
and Consumer Fraud and Abuse Prevention Act
(‘‘Prevention Act’’) codified at 15 U.S.C. 6101–6108.
See FTC, Telemarketing Sales Rule, 60 FR 43842
(Aug. 23, 1995). The Telemarketing Sales Rule has
been amended since 1995, prompting the SEC’s
request for the MSRB to review its telemarketing
rule. See amendments cited infra note 7.
4 See Prevention Act supra note 3.
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Commission to promulgate, or direct
any national securities exchange or
registered securities association to
promulgate, rules substantially similar
to the FTC rules to prohibit deceptive
and other abusive telemarketing acts or
practices, unless the Commission
determines either that the rules are not
necessary or appropriate for the
protection of investors or the
maintenance of fair and orderly markets,
or that existing federal securities laws or
Commission rules already provide for
such protection.5
In 1997, the SEC determined that
telemarketing rules promulgated and
expected to be promulgated by selfregulatory organizations, together with
the other rules of the self-regulatory
organizations, the federal securities
laws, and the SEC’s rules thereunder,
satisfied the requirements of the
Prevention Act because, at the time, the
applicable provisions of those laws and
rules were substantially similar to the
Telemarketing Sales Rule.6 Since 1997,
the FTC has amended its telemarketing
rules in light of changing telemarketing
practices and technology.7
In May 2011, Commission staff
directed the MSRB to conduct a review
of its telemarketing rule and propose
rule amendments that provide
protections that are at least as strong as
those provided by the FTC’s
telemarketing rules.8 Commission staff
had concerns ‘‘that the [self-regulatory
organization] rules overall have not kept
pace with the FTC’s rules, and thus may
no longer meet the standards of the
Prevention Act.’’ 9
The proposed rule amendments, as
directed by the Commission staff, would
amend and adopt provisions in Rule G–
5 See
15 U.S.C. 6102.
Telemarketing and Consumer Fraud and
Abuse Prevention Act; Determination that No
Additional Rulemaking Required, Securities
Exchange Act Release No. 38480 (Apr. 7, 1997), 62
FR 18666 (Apr. 16, 1997). The Commission also
determined that some provisions of the FTC’s
telemarketing rules related to areas already
extensively regulated by existing securities laws or
activities not applicable to securities transactions.
Id. at 62 FR 18667–69.
7 See, e.g., FTC, Telemarketing Sales Rule, 73 FR
51164 (Aug. 29, 2008) (amendments to the
Telemarketing Sales Rule relating to prerecorded
messages and call abandonments); and FTC,
Telemarketing Sales Rule, 68 FR 4580 (Jan. 29,
2003) (amendments to the Telemarketing Sales Rule
establishing requirements for, among other things,
sellers and telemarketers to participate in the
national do-not-call registry).
8 See Letter from Robert W. Cook, Director,
Division of Trading and Markets, SEC, to Michael
G. Bartolotta, then Chairman of the Board of
Directors of the MSRB, dated May 10, 2011 (the
‘‘Cook Letter’’). SEC staff also asked the MSRB to
coordinate with the Financial Industry Regulatory
Authority (‘‘FINRA’’) regarding proposed
telemarketing rule amendments.
9 Id.
6 See
E:\FR\FM\04MRN1.SGM
04MRN1
]]>Agencies
[Federal Register Volume 78, Number 42 (Monday, March 4, 2013)]
[Notices]
[Pages 14141-14144]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04857]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68977; File No. SR-BX-2013-017]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Routing Fees to C2
February 25, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February
[[Page 14142]]
21, 2013, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed with the
Securities and Exchange Commission (``SEC'' or ``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend fees for routing options to away
markets in Chapter XV, entitled ``Options Pricing,'' at Section 2.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxbx.cchwallstreet.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Routing Fees at Chapter XV,
Section 2(4) of the Exchange Rules in order to recoup costs applicable
to the C2 Options Exchange, Inc. (``C2'') that the Exchange incurs for
routing and executing orders in equity options. Today, the Exchange
calculates Routing Fees by assessing certain Exchange costs related to
routing orders to away markets plus the away market's transaction fee.
The Exchange assesses a $0.05 per contract fixed Routing Fee when
routing orders to the NASDAQ OMX PHLX LLC (``PHLX'') and the NASDAQ
Stock Market LLC (``NOM'') and a $0.11 per contract fixed Routing Fee
to all other options exchanges in addition to the actual transaction
fee or rebate paid by the away market.\3\
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\3\ Today, the transaction fee assessed by the Exchange is based
on the away market's actual transaction fee or rebate for a
particular market participant at the time that the order was entered
into the Exchange's trading system. This transaction fee is
calculated on an order-by-order basis, since different away markets
charge different amounts. In the event that there is no transaction
fee or rebate assessed by the away market, the only fee assessed is
the fixed Routing Fee. With respect to the rebate, the Exchange pays
a market participant the rebate offered by an away market where
there is such a rebate. Any rebate available is netted against a fee
assessed by the Exchange. The Exchange is not proposing to amend its
calculation of the away market's transaction fee as described
herein.
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The fixed Routing Fee is based on costs that are incurred by the
Exchange when routing to an away market in addition to the away
market's transaction fee. For example, the Exchange incurs a fee when
it utilizes Nasdaq Options Services LLC (``NOS''), a member of the
Exchange and the Exchange's exclusive order router.\4\ Each time NOS
routes to away markets NOS incurs a clearing-related cost \5\ and, in
the case of certain exchanges, a transaction fee is also charged in
certain symbols, which fees are passed through to the Exchange. The
Exchange also incurs administrative and technical costs associated with
operating NOS, membership fees at away markets, Options Regulatory Fees
(``ORFs'') and technical costs associated with routing options.
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\4\ See BX Rules at Chapter VI, Section 11(e) (Order Routing).
\5\ The Options Clearing Corporation (``OCC'') assesses a
clearing fee of $0.01 per contract side. See Securities Exchange Act
Release No. 68025 (October 10, 2012), 77 FR 63398 (October 16, 2012)
(SR-OCC-2012-18).
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C2 recently filed a ruled change to amend its transaction fees and
rebates for simple,\6\ non-complex orders, in equity options classes
which became operative on February 1, 2013.\7\ C2 assesses its
transaction fees based on a formula wherein fees are calculated on a
per-contract basis.\8\ C2 pays rebates based on a formula wherein
rebates are calculated on a per-contract basis.\9\ Because of this
recent rule change, the Exchange proposes to amend C2 Routing Fees to
provide transparency to its market participants.
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\6\ C2 defines simple orders to exclude ETFs and indexes.
\7\ See Securities Exchange Act Release No. 68792 (January 31,
2013), 78 FR 8621 (February 6, 2013) (SR-C2-2013-004).
\8\ C2 utilizes the following formula to calculate its
transaction fees: C2 BBO Market Width at time of execution) x
(Market Participant Rate) x 50. The C2 BBO Market Width is the
difference between the quoted best offer and best bid in each class
on C2 (the displayed C2 ask price minus the displayed C2 bid price).
The Market Participant Rates are different rates for different types
of market participants, as follows: Market Participant Rate; C2
Market-Maker 30%; Public Customer (Maker) 40%; all other origins
50%. See C2's Fees Schedule.
\9\ C2 utilizes the following formula to compute rebates for
simple, non-complex Public Customer orders in all equity options
classes that remove liquidity (i.e. takers): Rebate = (C2 BBO Market
Width at time of execution) x (Order Size Multiplier) x 50. The
order size multiplier is as follows: 1-10 contracts will be 36%; 11-
99 contracts will be 30%; 100-250 contracts will be 20% and 251 plus
contracts is 0%. The maximum rebate is capped at $0.75 per contract.
See C2's Fees Schedule.
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The Exchange proposes to amend its non-Customer C2 Routing Fees to
assess the fixed cost of $0.11 per contract plus a flat rate of $0.85
per contract, except with respect to Customers.\10\ With respect to
Customers, the Exchange proposes not to pass the rebate offered by C2,
as is the case today for Routing to C2 and other away markets. The
Exchange proposes to not assess Customers a Routing Fee when routing
orders to C2. This is similar to the manner in which the BATS Exchange,
Inc. (``BATS'') prices Customer orders routed to C2.\11\ The Exchange
proposes to specifically note the amended rates in its rule text in
order to simplify C2 Routing Fees.
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\10\ Recent pricing changes by C2 will result in a maximum fee
of $0.85 per contract for non-Customer orders executed at C2 and
rebates or free executions for Customer orders executed at C2.
\11\ See SR-BATS-2013-012 (not yet published).
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As with all fees, the Exchange may adjust these Routing Fees in
response to competitive conditions by filing a new proposed rule
change.
2. Statutory Basis
BX believes that its proposal to amend its pricing is consistent
with Section 6(b) of the Act\12\ in general, and furthers the
objectives of Section 6(b)(4) of the Act,\13\ in particular, in that it
is an equitable allocation of reasonable fees and other charges among
its Participants.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that its proposal to amend non-Customer C2
Routing Fees from actual transaction charges to a flat rate, in
addition to its fixed cost, is reasonable because the current C2
Routing Fees are not transparent. The Exchange believes that assessing
a flat rate in addition to the fixed cost assessed by the Exchange will
provide market participants certainty with respect to C2 Routing Fees.
Further, each destination market's transaction charge varies and there
is a cost incurred by the Exchange when routing orders to away markets.
The costs to the Exchange include clearing costs, administrative and
technical costs associated with operating NOS, membership fees at away
markets, ORFs
[[Page 14143]]
and technical costs associated with routing options. The Exchange
believes that the proposed non-Customer C2 Routing Fees will enable the
Exchange to recover the costs it incurs to route orders to C2 in
addition to the flat fee to recoup transaction costs.
The Exchange believes that its proposal to amend the non-Customer
C2 Routing Fees from actual transaction charges to a flat rate, in
addition to its fixed cost, is equitable and not unfairly
discriminatory because the Exchange would uniformly assess the same C2
Routing Fees to all non-Customer market participants. Under its flat
fee structure, taking all costs to the Exchange into account, the
Exchange may operate at a slight gain or a slight loss for orders
routed to and executed at C2. The Exchange believes that its proposed
Routing Fees for routing non-Customer orders to C2 are reasonable
because they are an approximation of the maximum fees the Exchange will
be charged for such executions, including costs. As a general matter,
the Exchange believes that the proposed fees will allow it to recoup
and cover its costs of providing routing services to C2.
The Exchange believes that its proposal to not pay a rebate to
Customers and assess no Customer Routing Fee is reasonable, equitable
and not unfairly discriminatory. The Exchange believes that the pricing
structure is reasonable because, although not an approximation of the
cost of routing to C2, Customer orders will still receive executions
free of charge, whereas all other non-Customer routed orders routed to
C2 would be assessed a Routing Fee. The Exchange believes that the
proposed pricing for Customer orders is equitable and not unfairly
discriminatory because it would apply uniformly to all Customer
transactions. Participants desiring the rebate offered by C2 can route
orders directly in order to take advantage of the rebate. Market
participants may submit orders to the Exchange as ineligible for
routing or ``DNR'' to avoid Routing Fees.
Further, the Exchange believes that it is equitable and not
unfairly discriminatory to assess a fixed cost of $0.05 per contract to
route orders to NASDAQ OMX away markets (BX Options and NOM) because
the cost, in terms of actual cash outlays, to the Exchange to route to
those markets is lower. For example, costs related to routing to BX
Options and NOM are lower as compared to other away markets because NOS
is utilized by all three exchanges to route orders.\14\ NOS and the
three NASDAQ OMX options markets have a common data center and staff
that are responsible for the day-to-day operations of NOS. Because the
three exchanges are in a common data center, Routing Fees are reduced
because costly expenses related to, for example, telecommunication
lines to obtain connectivity are avoided when routing orders in this
instance. The costs related to connectivity to route orders to other
NASDAQ OMX exchanges are de minimis. When routing orders to non-NASDAQ
OMX exchanges, the Exchange incurs costly connectivity charges related
to telecommunication lines and other related costs when routing orders.
The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to pass along savings realized by leveraging NASDAQ
OMX's infrastructure and scale to market participants when those orders
are routed to BX Options and NOM. It is important to note with respect
to routing to an away market that orders are routed based on price
first.\15\ The Exchange will route orders to away markets where the
Exchange's disseminated bid or offer is inferior to the national best
bid (best offer) (``NBBO'') price.\16\
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\14\ See Chapter VI, Section 11 of the NASDAQ and BX Options
Rules and Phlx Rule 1080(m)(iii)(A).
\15\ See BX Rules at Chapter XII (Options Order Protection and
Locked and Crossed Market Rules).
\16\ See BX Rules at Chapter VI, Section 11(e) (Order Routing).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes that the
rule change would allow the Exchange to recoup its costs when routing
orders designated as available for routing by the market participant to
C2. Participants may choose to mark the order as ineligible for routing
to avoid incurring these fees.\17\ Today, other options exchanges also
assess similar fees to recoup costs incurred by the Exchange to route
orders to away markets. The Exchange routes orders to away markets
where the Exchange's disseminated bid or offer is inferior to the
national best bid (best offer) (``NBBO'') price and based on price
first.\18\
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\17\ Id.
\18\ See supra note 15.
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The Exchange operates in a highly competitive market, comprised of
eleven exchanges, in which market participants can easily and readily
direct order flow to competing venues if they deem fee levels at a
particular venue to be excessive. Accordingly, the fees that are
assessed by the Exchange must remain competitive with fees charged by
other venues and therefore must continue to be reasonable and equitably
allocated to those Participants that opt to direct orders to the
Exchange rather than competing venues.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\19\ At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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\19\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number No. SR-BX-2013-017 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number No. SR-BX-2013-017. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will
[[Page 14144]]
post all comments on the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent
amendments, all written statements with respect to the proposed rule
change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street, NE., Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
such filing also will be available for inspection and copying at the
principal office of BX. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number
No. No. SR-BX-2013-017, and should be submitted on or before March 25,
2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-04857 Filed 3-1-13; 8:45 am]
BILLING CODE 8011-01-P
